Correlation Between Annaly Capital and Invesco Trust
Can any of the company-specific risk be diversified away by investing in both Annaly Capital and Invesco Trust at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Annaly Capital and Invesco Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Annaly Capital Management and Invesco Trust For, you can compare the effects of market volatilities on Annaly Capital and Invesco Trust and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Annaly Capital with a short position of Invesco Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Annaly Capital and Invesco Trust.
Diversification Opportunities for Annaly Capital and Invesco Trust
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Annaly and Invesco is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management and Invesco Trust For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Trust For and Annaly Capital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Annaly Capital Management are associated (or correlated) with Invesco Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Trust For has no effect on the direction of Annaly Capital i.e., Annaly Capital and Invesco Trust go up and down completely randomly.
Pair Corralation between Annaly Capital and Invesco Trust
Considering the 90-day investment horizon Annaly Capital Management is expected to under-perform the Invesco Trust. In addition to that, Annaly Capital is 3.47 times more volatile than Invesco Trust For. It trades about -0.18 of its total potential returns per unit of risk. Invesco Trust For is currently generating about -0.24 per unit of volatility. If you would invest 1,206 in Invesco Trust For on January 19, 2024 and sell it today you would lose (26.00) from holding Invesco Trust For or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Annaly Capital Management vs. Invesco Trust For
Performance |
| Timeline |
| Annaly Capital Management |
| Invesco Trust For |
Annaly Capital and Invesco Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Annaly Capital and Invesco Trust
The main advantage of trading using opposite Annaly Capital and Invesco Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Annaly Capital position performs unexpectedly, Invesco Trust can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Invesco Trust will offset losses from the drop in Invesco Trust's long position.| Annaly Capital vs. ARMOUR Residential REIT | Annaly Capital vs. Two Harbors Investments | Annaly Capital vs. Arbor Realty Trust | Annaly Capital vs. Chimera Investment |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.
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